Ericsson to buy Microsoft's internet TV arm - Financial Times

Ericsson will buy Microsoft's Mediaroom internet TV business, which provides the technology behind internet connected set-top boxes. The Swedish telecoms equipment maker said it would become the leader in the internet TV platform market with more than a quarter of sales globally following the purchase. Microsoft's Mediaroom makes the software that helps deliver TV over the internet in about 22m set-top boxes in 21 countries, including for companies such as AT&T, Deutsche Telekom and Telefónica. Microsoft will become focused on TV applications and services that can run on its Xbox entertainment console rather than providing technology to third-party TV providers. Microsoft will reveal plans for a new Xbox next month, which is expected to make TV a key use for the platform alongside gaming. Ericsson has been building a portfolio of technology used in the TV and video market through acquisitions as well as the development of its own software. The company views video distribution as crucial to its customers in the telecoms market as 4G networks are deployed and taken up by smartphone users demanding entertainment on the move. Telecoms companies have hit back at competition from cable companies in their core broadband markets with TV services of their own over the internet. Ericsson did not disclose the purchase price for the business, although one person with knowledge of the situation said that it was valued at about $150m. A spokesman said the deal was within the range of $99m to $234m that Ericsson had paid for two previous acquisitions in the sector. Ericsson said Mediaroom would bring 40 customers and another 11m subscriber households to its growing media-focused business. Ericsson is the world's largest supplier of telecoms equipment, but has increasingly moved into software and services that carry a higher margin than in the increasingly commoditised market for infrastructure that has been challenged by cheaper Chinese rivals. Ericsson estimates that the global connected TV market – or IPTV – will reach 76m subscribers in 2013 with revenues of $32bn, and then growing to 105m subscribers and $45bn in revenues by 2015. Per Borgklint, senior vice-president at the Swedish group, said: "Ericsson's vision of the 'networked society' foresees 50bn devices to be connected via broadband, mobility and cloud. Future video distribution will have a similar impact on consumer behaviour and consumption as mobile voice has had." Mediaroom was created in 2007 and is based in Mountain View, California, employing more than 400 people. The deal will close in the second half of the year. Tom Gibbons, corporate vice-president of Microsoft, said. "Ericsson is positioned to be a valuable strategic partner for operators and TV service providers around the world as the IPTV market evolves." Ericsson shares were little changed at SKr77.85 at the close in Stockholm. Microsoft shares were down $0.16 at $28.55 in early afternoon trading in New York. Copyright The Financial Times Limited 2013. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNEn9zZq3tnlu6Z8Y99RLYF5Cp4MeA&url=http://www.ft.com/cms/s/0/15fec856-a05c-11e2-a6e1-00144feabdc0.html

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